What is the Employment Income Deduction in Japan?
What is the Employment Income Deduction?
Employment Income Deduction (給与所得控除 - kyuyo shotoku kojo) is a standard tax deduction in Japan that automatically reduces the taxable portion of your salary income. This system acknowledges that employees incur various work-related expenses and provides a simplified way to deduct these costs without requiring itemization.
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Deduction Calculation
The deduction amount is calculated based on your gross annual salary using the following brackets:
| Gross Annual Salary (JPY) | Deduction Amount |
|---|---|
| Up to ¥1,625,000 | Fixed amount of ¥550,000 |
| ¥1,625,001 - ¥1,800,000 | 40% of income - ¥100,000 |
| ¥1,800,001 - ¥3,600,000 | 30% of income + ¥80,000 |
| ¥3,600,001 - ¥6,600,000 | 20% of income + ¥440,000 |
| ¥6,600,001 - ¥8,500,000 | 10% of income + ¥1,100,000 |
| Over ¥8,500,000 | Fixed amount of ¥1,950,000 |
Important Notes:
- The maximum deduction amount is capped at ¥1,950,000
- This deduction applies automatically - no separate application is needed
- Part-time workers are also eligible for this deduction
Calculation Example
Here's a practical example of how the deduction works:
- Annual Salary: ¥5,000,000
- Applicable Rate: 20% + ¥440,000 (falls in ¥3.6M - ¥6.6M bracket)
- Calculation: (¥5,000,000 × 20%) + ¥440,000 = ¥1,440,000
- Taxable Income: ¥5,000,000 - ¥1,440,000 = ¥3,560,000